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Pharma CEOs to face tough questions about skyrocketing drug prices

Executives from seven pharmaceutical companies are set to face questions about the rising costs of prescription drugs on Capitol Hill Tuesday morning.

This will be the Senate Finance committee's second hearing of the year focused on drug prices.

Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) called for the hearing, entitled, “Drug Pricing in America: A Prescription for Change.”

“Patients and taxpayers deserve to hear from leaders in the industry about what’s behind this unsustainable trend and what can be done to lower costs,” the senators said in a statement.

‘A potential sea change in Washington’

The Trump administration and lawmakers from both parties have made lowering prescription drug prices a top priority, though Republicans and Democratic lawmakers often disagree on possible solutions.

“I think it’s really indicative of a political sea change in Washington, that you have members of both parties in both chambers really rushing to be on the record — saying that we need action now to lower the cost of prescription drugs,” said Jon Conradi, a spokesperson for the Campaign for Sustainable Rx Pricing.

NEW YORK, NY - JANUARY 17: Albert Bourla (R), chief executive officer of Pfizer pharmaceutical company, waits to ring the closing bell at the New York Stock Exchange (NYSE) on Thursday afternoon, January 17, 2019 in New York City. (Photo by Drew Angerer/Getty Images)

The chief executive officers of AbbVie, AstraZeneca, Bristol-Myers Squibb, Merck, Pfizer and Sanofi are set to testify on Tuesday. Johnson & Johnson is sending Jennifer Taubert, head of the company’s pharmaceuticals unit, instead of CEO Alex Gorsky.

Conradi said senators should press the executives on how drug manufacturers determine list prices for drugs.

“Everyone from consumers to Congress has very little idea about how a pharmaceutical company makes a decision to hike a list price because there is very little transparency around it,” said Conradi.

The executives are expected try to shift blame for rising drug prices to other aspects of the healthcare industry. On Monday, Grassley warned the executives against playing the blame game.

Yahoo Finance requested interviews with each of the executives testifying. While none agreed to an interview head of the hearing, several sent statements to Yahoo Finance.

  • “We share the committee’s goal of reducing patient out-of-pocket costs and are committed to working with Senators Grassley and Wyden on innovative policy ideas. Our CEO, Ken Frazier, will be there to discuss solutions with the committee later this month,” said a Merck spokesperson in a statement.

  • “We look forward to the opportunity to participate in the important discussion during the Senate Finance Committee hearing and sharing our proposed solutions to address patient access and affordability. AstraZeneca agrees with many that the current healthcare system in the US is not sustainable – we are committed to shaping a system that more directly benefits patients and continues to support scientific innovation,” said an Astrazeneca spokesperson in a statement.

  • “We share the public’s concerns about accessibility and affordability of medicines, and continue to explore innovative ways to find solutions that will help eliminate or significantly reduce the out-of-pocket expenses for patients. Despite the meaningful steps Sanofi has taken, we recognize that more needs to be done. Given the diversity of our health care system, there is likely not a single, one size fits all approach. Dr. Brandicourt has accepted the invitation to appear before the Senate Committee on Finance on February 26 and looks forward to sharing Sanofi’s approach to responsible pricing and to discussing policy solutions to improve access and affordability for patients,” said a Sanofi spokesperson in a statement.

Last week, Grassley and Wyden also opened an investigation into the rise in insulin prices. The senators pointed to the price of Eli Lilly’s insulin, Humalog, which the senators said spiked 585% between 2001 and 2015.

“We are concerned that the substantial increases in the price of insulin over the past several years will continue their upward drive and pose increasingly severe hardships not only on patients that require access to the drug in order to stay alive but also on the taxpayer,” said the senators in a joint statement.

The senators sent letters to Eli Lilly, Novo Nordisk, and Sanofi, asking for information about the process of setting list prices, cost of research & development, and margins from selling insulin.

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.